EEL News Service Issue 2011/11 of 22 December 2011

The reference for a preliminary ruling is made by the High Court of Justice of England and Wales in a proceeding between the Air Transport Association of America and others against the UK Minister for Energy and Climate Change. The applicants are challenging the measures taken by the UK to implement Directive 2008/101, which includes the aviation sector in the EU emission trading scheme (ETS). They claim that, by including international aviation in the ETS, the EU is in breach of international law. The Court had to examine whether the validity of the Directive can be reviewed against several international agreements and customary international law, as well as the compatibility of the measure with those sources.

The Court found that the Chicago Convention cannot serve as a benchmark for the validity of the Directive as the EU is neither a contracting part to the agreement, nor did the EU fully assume competence in this field as to indirectly bind the EU by its rules. It further held that the Kyoto Protocol can also not be relied upon as a benchmark, as its provisions are neither unconditional nor sufficiently precise as to confer on individuals the right to rely on it in legal proceedings. The Court did however examine the compatibility of the measure with the Open Skies agreement, as the EU is a contracting party to it, but found that none of its provisions are breached by the Directive.

Strikingly, the Court disagreed with the Opinion of Advocate General Kokott that individuals could not rely upon certain principles of customary international law as benchmarks for an act of the EU. The Court is of the opinion that individuals may indeed rely upon customary international law in so far as specific principles are capable of calling into question the competence of the EU to adopt such an act and if the act in question is liable to affect rights which the individual derives from EU law. Correspondingly, it examined the compatibility of measure with the principles of the sovereignty of States over their airspace, the illegitimacy of claims to sovereignty over the high seas and the freedom to fly over the high seas. The judges observed that the ETS is only applicable to the foreign and domestic airline operators when their aircraft is physically in the territory of one of the Member States of the EU and are thus subject to the unlimited jurisdiction of the EU, and thus no principle was violated.

The Court concluded that its examination has disclosed no factor of such kind as to affect the validity of Directive 2008/101, neither where treaty law nor where customary international law are concerned. The ECJ thus did not create a hurdle that would force the EU to not let the system enter into force on 1 January 2012.

It remains to be seen whether the judgment will mark the end of the external struggle against the scheme. Notably the USA and Chinese resistance to the EU measure might keep growing in spite of this verdict, and lead to trade wars with these and other countries.. Meanwhile, EU Climate Commissioner Hedegaard already stated that after the crystal clear ruling of today, she expects US airlines to respect EU law, as the EU respects US law.

This case against Austria was brought before the ECJ by the Commission regarding the compatibility of a measure designated for the protection of the environment with the principle of the free movement of goods. Austria implemented a sectoral traffic prohibition of 84km for lorries of over 7.5 tonnes carrying certain goods on a section of the A12 motorway in the Tyrol region, a principal route between southern Germany and northern Italy. Austria has to decrease the nitrogen levels in this region as part of its obligations for nitrogen dioxide reductions set by Directive 96/52/EC (Air Quality Directive) and Directive 1999/30/EC (Limit values for sulphur dioxide, nitrogen dioxide and oxides and nitrogen, particulate matter and lead in ambient air). However, the Commission considered the measure to be an unjustified obstacle to the principle of the free movements of goods and brought the present action before the Court of Justice as an infringement procedure.

In a previous similar case, Austria was already found to be violating EU law by prohibiting lorries over 7.5 tonnes from carrying certain goods on a 46 km section of the A12 motorway (Case C-320/03). In this case, the Court had essentially to assess whether the new measure is a restriction of the free movement of goods and if so, if there are justifications for such a restriction. The Court made the initial observation that Member States have discretion in adopting measures for compliance with the limits set by the Directives. Yet, such discretion must be exercised consistently with EU law, including the fundamental principle of the free movement of goods. The Court regarded the measure to have an equivalent effect to quantitative restrictions, as it prevents the use of a mode of transport for those goods, which is in principle incompatible with the free movement of goods.

The Court recalled that the protection of the environment is an essential objective of the EU and a national measure in that regards could justify obstructions to intra-Community trade, provided that the measures are proportionate to the objective sought. While the Court considers the measure to be appropriate for achieving the objective, protection of the environment, it did find that the criterion of proportionality was not met. In the Court’s view, Austria again failed to examine carefully the possibility of less restrictive measures, such as extended Euro classes’ prohibitions or introducing a permanent speed limit of 100 km/h. In the words of the Court, “it has not been shown that the two principal alternative measures suggested by the Commission as measures less restrictive of free movement of goods are not appropriate”. Consequently, the Court held that the measure in question disproportionately restricted the free movement of goods.

Added to Legislation

Household detergents to become almost phosphate-free

The European Parliament approved a measure banning almost completely phosphate in household detergents on 14 December 2011. The measure imposes a phosphorus limit of 0.5 grams per standard dose in domestic laundry detergents beginning in June 2013. Following the Parliament’s insistence on the inclusion of a deadline for phosphorus in dishwasher detergents, a limit of 0.3 grams will apply by 1 January 2017. Phosphorus as an active ingredient of laundry and dishwasher detergents can lead to algal blooms that harm fish and other aquatic life when released into waterways. The measure accordingly aims at protecting aquatic life in waterways and seas around the EU. A majority of 681 votes was in favor with 18 votes opposing the measure and 4 abstaining. It will now need to be approved by the Council for the agreement to become formal EU law.

Whilst NGOs welcomed the agreement reached by the Parliament, some also considered the deadlines for the entry into force of the measure as being “excessive” in light of the ‘urgency needed to finally bring life back to the Danube and the Baltic or Black seas”.

The Danish Minister for European Affairs, Nicolai Wammen, presented the priorities of the upcoming Danish EU Presidency on 16 December 2011. According to the Minister, various environmental topics and issues will be a priority for Denmark’s Presidency, which begins in January. Denmark will seek to reach a common position on the energy efficiency directive an on a low-carbon roadmap. The energy efficiency directive has previously divided Member States over the inclusion of binding targets as favored by the European Parliament and initially by Denmark as well. Also, it will initiate discussions on “alternative strategies” for meeting the long-term climate goals of the EU given that higher emissions targets for 2020 could still not be introduced into the low-carbon roadmap. Moreover, Denmark will attempt to push through a Commission proposal giving Member States flexibility on genetically modified organism bans. With the Presidency, Denmark is expecting climate change, energy and environmental concerns to be tied more closely into other policy areas, such as agriculture, fisheries and the single market.

The European Commission notified the Netherlands that it is violating Directive 2002/91 on the energy performance of buildings. The directive, which is in the process of being replaced by a new one (Directive 2010/31), demands that EU Member States shall ensure that, when buildings are sold or rented out, an energy performance certificate (popularly known as energy label) is made available by the owner to the prospective buyer or tenant. Dutch law does require this, but does not impose a sanction. In practice, labels are hardly ever provided for and in the rare cases that they are issued, many are incorrect. The Inspection service Public Housing found out that in 2009, on the average half of the investigated labels were incorrect, though in 2010 only 20% of the investigated (30) labels was incorrect.

An interesting legal question might be the fact that the present Directive merely stipulates the duty to issue labels, without talking about imposing sanctions when this does not happen. The new Directive 2010/31 introduces a provision that tells that “Member States shall lay down the rules on penalties applicable to infringements of the national provisions adopted pursuant to this Directive and shall take all measures necessary to ensure that they are implemented. The penalties provided for must be effective, proportionate and dissuasive.” In spite of the absence of such a provision in the present Directive, EU Member States are obliged to ensure that violations of obligations introduced by EU directives are properly dealt with. The absence of a specific provision on sanctions thus does not mean that the Dutch ‘laissez-faire’ policy on labels is in line with EU law.

The Commission has send three letters of formal notice to Italy, reminding it of three ECJ judgments calling for compliance with Directive 2009/147/EC on the conservation of wild birds (Birds Directive). The Directive, originally stemming from 1979, encompasses a comprehensive system of protection for all wild bird species naturally occurring in the area of the EU. Especially the establishment of Special Protection Areas means that habitats for endangered and migratory species are preserved. These areas now form a part of the Europewide Natura 2000 network. The Directive also bans such activities which directly threaten birds, for instance indiscriminate killing or the destruction of their nests, and limits legitimate hunting in order to ensure sustainability.

In two of the rulings of the ECJ, the Court held that Italy failed to comply with the provisions of the Directive as two regional authorities adopted rules authorizing the hunting of protected bird species contrary to the Directive. The two regions subsequently reviewed their legislation; however, the Commission found that both regions continue to issue hunting derogations in breach of the Directive.

In the other case the Court found general failings in Italy’s transposition of the Directive at both the national as well as the regional level. Despite of Italy having adjusted its legislation since then, evidence available to the Commission shows that several breaches have not yet been solved.

On 12 December 2011 the seventeenth Conference of the Parties of the UNFCCC (COP17) and the seventh Conference of the Parties serving as meeting of the Parties to the Kyoto Protocol (CMP7) concluded in Durban, South Africa. It formed the longest session in the history of the international climate change negotiations. On a positive note, the Parties agreed on a package of decisions which guarantees the continuation of the talks for the future regime after 2012, but they failed to provide clarity on its architecture both in terms of contents and form.

In particular, the two Ad-Hoc Working Groups established in 2005 and 2007 respectively on the further commitments for Annex I Parties under the Kyoto Protocol (AWG-KP) and on the long-term cooperative action under the Convention (AWG-LCA), did not conclude their work and agreed once again to delay their major results of, at least, one year.

On the Kyoto Protocol, Parties formally recognized the second commitment period but delayed the decision on its length (5 or 8 years) to CMP8 in Qatar in 2012, as well as any decision on the new greenhouse gas emission reduction targets. On the latter item Parties were only invited to submit information on their quantified emission reduction and limitation objectives (QELROs) for the second commitment period under the Kyoto Protocol by 1 May 2012. This conclusion leaves a big vacuum on the level of ambition of the new commitments under the Kyoto Protocol. This uncertainty is especially disquieting after the refusal by Japan, Russian Federation and Canada to commit themselves to any new binding targets under the Protocol. Since the USA (the second largest emitter of greenhouse gases in the world after China) never ratified the Kyoto Protocol, the backing out of these countries (notably Russia, the world’s fourth largest emitter) means that the remaining Annex I Parties would need to step up their commitments and reductions in order to make an actual difference in terms of reducing global emissions.

On the Convention track, Parties advanced the work on the operationalization of the Cancun agreement (decision 1/CP.16) with the view to increase the level of ambition of Annex I Parties’ mitigation actions and further decided to launch a new process for the finalization of a new regime before 2020. This new regime would introduce obligations for both developed and developing countries, which would form a breakthrough that was heavily debated. In particular, Annex I Parties are requesting new forms of commitments for the so-called ‘major emitters’ like China and India, and this innovation will inevitably split the group of developing countries. The form of such a new agreement was not decided in Durban where Parties opted for three options – ‘protocol, legal instrument or agreed outcome with legal force’ – which will be open for different interpretations.

In detail, the Durban package included, amongst others:

Establishment of a new body to negotiate a global agreement (Ad Hoc Working Group on the Durban Platform for Enhanced Action) by 2015 to come into effect and be implemented from 2020;

Extension of the work of the AWG-LCA for one year;

Launch of a workplan on enhancing mitigation ambition with a view to ensuring the highest possible mitigation efforts by all parties (workshop to be held at the first negotiating session in 2012);

Identification of a new market-based mechanism to be defined under the Convention;

Launch of the Green Climate Fund;

Agreement on the second commitment period of the Kyoto Protocol;

Agreement on the LULUCF rules and on the changes to the existing flexible mechanisms.

In sum, Durban produced a new delay, both under the Kyoto Protocol and the Convention track. On the side of the Protocol, while for the first time Parties formally recognized the need of an overall reduction of greenhouse gas emissions by 25-40% by 2020 compared to 1990 levels, too much uncertainty is left on the length of the commitment period, on the participation of Annex I Parties and on the rules about LULUCF and flexible mechanisms. On the side of the Convention, uncertainty is related to the overall architecture of the new regime (which legal form if any?) and its strength and ambition.

Leonardo Massai

US Order for Airlines regarding EU ETS

The US Department of Transportation (DOT) has served an order against nine European airlines on 16 December 2011, requiring them to submit traffic and carbon allowance data to it. A similar order has also been issued to seven US airlines, requiring financial information on allowance costs additional to the traffic and carbon allowance data.

The aim of the order has yet to be formally communicated by the DOT. However, a statement by ‘Airlines for America’, one of the largest airline trade organizations in the US, insinuates that ‘the information is intended to assist in countering the illegal application of the EU ETS to US airlines’.

These events follow the introduction of an “Anti-EU ETS” Bill into the U.S. Senate on 7 December 2011, prohibiting US aircraft operators to participate in EU ETS. The Bill, amongst others, is to enable the DOT to take necessary action to ‘ensure America’s aviation operators are not penalized by any tax unilaterally imposed by the EU’.

In relation to that, the China Air Transport Association (CATA) asked the domestic airlines not take part in the EU ETS or to enter into negotiations for preferential treatment. The Director General of CATA, Wei Zhenzhong, said that the Chinese government should consider the adoption of retaliatory measures if the EU were to hold on to the scheme. Also, four Chinese carriers are already planning to file a lawsuit against the measure, having already the official support of the CATA.